The government on Wednesday extended export benefits under the tax refund scheme — RoDTEP — to chemicals, pharmaceuticals and products of iron and steel for a specified period with a view to boost shipments of these goods, amidst exports growth recording a contraction of 16.65 per cent in October. Benefits under the Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme will be given to exports made during December 15 this year till September 30 next year.
These sectors were left out in the earlier exercise which was conducted in August 2021. “Taking a major step to boost exports, the Centre today further expanded the scope of the RoDTEP scheme by including the exports made from the chemical sector, pharmaceuticals sector and exports of articles of iron and steel,” the commerce ministry said.
It said that this was a long standing demand of the industry, which has been accepted. According to the notification of the Director General of Foreign Trade (DGFT), “Additional export sectors/items… are being added under RoDTEP for exports made from December 15 this year and shall be applicable till September 30, 2023.”
The government in August last year announced the rates of tax refunds under the export promotion scheme RoDTEP for about 8,700 products, such as marine goods, yarn and dairy items. In the last fiscal, Rs 12,454 crore was there for refunds under the scheme. After the addition of these products, the expanded list will increase from the current 8,731 export items to 10,342 goods. According to an official, the financial implication of extension of the scheme is likely to be around Rs 1,000 crore. RoDTEP is based on the globally accepted principle that taxes and duties should not be exported, and taxes and levies borne on the exported products should be either exempted or remitted to exporters.
The scheme rebates/refunds the embedded central, state and local duties/taxes to the exporters that were so far not being rebated/refunded. The scheme is being implemented from January 2021 and the rebate is issued as a transferable electronic scrip by the Central Board of Indirect Taxes and Customs (CBIC). “In the present times, when exports are facing headwinds on account of signs of recession in some of the developed markets and supply chain disruptions on account of Russia-Ukraine conflict, extension of RoDTEP to uncovered sectors like chemicals, pharmaceuticals and articles of iron and steel is likely to enhance the export competitiveness of these sectors,” the ministry said.
The move assumes significance as the country’s exports entered negative territory after a gap of about two years, declining sharply by 16.65 per cent to USD 29.78 billion in October, mainly due to global demand slowdown, even as the trade deficit widened to USD 26.91 billion, according to data of the ministry. Key export sectors, including gems and jewellery, engineering, petroleum products, ready-made garments of all textiles, chemicals, pharma, marine products, and leather, recorded negative growth during October.
Welcoming the decision, Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai said: “It is an extremely timely step which will provide zero rating of chemicals , pharma and articles of iron and steel products and will impart further competitiveness to their exports as our exports are facing headwinds due to global factors. This move will help in pushing exports”.
Story first published: Thursday, December 8, 2022, 8:55 [IST]